The smartest money in the room is turning bearish

Hedge funds are becoming increasingly bearish, according to a report from Societe Generale's Cross Asset Research team.

"Starting in December last year, Hedge Fund positioning reveals a further reduction in risk appetite in the early days of 2016," the note said.

"Falling oil prices, the uncertainty about Chinese growth and its exchange rate policy, as well as the increased market volatility, all seem to touch the open nerve of deflation fears. Independent of whether this particular focus is justified or not, it goes a long way in explaining the current risk aversion.".

SocGen also put together some charts detailing which asset classes, currencies, and commodities hedge funds are turning negative on. We've included them below.